Fluids drawn from the deep earth carry a mixture of gases, notably carbon dioxide (CO2), hydrogen sulfide (H2S), methane (CH4) and ammonia (NH3). These pollutants contribute to global warming, acid rain, and noxious smells if released. Existing geothermal electric power plants emit an average of 122 kg of CO2 per megawatt-hour (MW·h) of electricity, a small fraction of the emission intensity of conventional fossil fuel plants. Plants that experience high levels of acids and volatile chemicals are usually equipped with emission-control systems to reduce the exhaust. Geothermal power plants could theoretically inject these gases back into the earth, as a form of carbon capture and storage.

In addition to dissolved gases, hot water from geothermal sources may hold in solution trace amounts of toxic chemicals such as mercury, arsenic, boron, antimony, and salt. These chemicals come out of solution as the water cools, and can cause environmental damage if released. The modern practice of injecting spent geothermal fluids back into the Earth to stimulate production has the side benefit of reducing this environmental risk.

Direct geothermal heating systems will contain pumps and compressors, and the electricity they consume may come from a polluting source. This parasitic load is normally a fraction of the heat output, so it is always less polluting than electric heating. However, if the electricity is produced by burning fuels, then the net pollution of geothermal heating may be comparable to directly burning the fuel for heat. For example, a geothermal heat pump powered by electricity from a combined cycle natural gas plant would produce about as much pollution as a natural gas condensing furnace of the same size. Therefore the environmental value of direct geothermal heating applications is highly dependent on the emissions intensity of the neighboring electric grid.

Plant construction can adversely affect land stability. Subsidence has occurred in the Wairakei field in New Zealand and in Staufen im Breisgau, Germany. Enhanced geothermal systems can trigger earthquakes as part of hydraulic fracturing. The project in Basel, Switzerland was suspended because more than 10,000 seismic events measuring up to 3.4 on the Richter Scale occurred over the first 6 days of water injection.

Geothermal has minimal land and freshwater requirements. Geothermal plants use 3.5 square kilometres per gigawatt of electrical production (not capacity) versus 32 and 12 square kilometres for coal facilities and wind farms respectively. They use 20 litres of freshwater per MW·h versus over 1000 litres per MW·h for nuclear, coal, or oil.